This Morning: iPad Bulls, Cree Plunges, LinkedIn Unlinked

By Tiernan Ray

Here are some things going on this morning in your world of tech:

iPad enthusiasm

Shares of Apple (AAPL) are up $2.27, or half a percent, at $522.14, a standout gainer in a sea of red this morning after the company yesterday introduced new models of iPad and MacBook, cut prices on its laptops, and said it would make its Mac OS X operating system and its productivity and creation applications free across all hardware.

There were a raft of positive notes from the Street overnight. Ed Parker with Lazard Capital Markets, reiterating a Buy recommendation and a $570 price target, writes that “offering Mac OS upgrade free of charge has profound ramifications and supports our “storage company” thesis.

“As we have argued, Apple gives away great software in order to increase the utility of commodity hardware (NAND flash), and the ability to sell incremental storage capacity within phones and tablets at software-type margins (80-90%) equates to a unique profit model in end-user computing. “

And Cantor Fitzgerald's Brian White, reiterating a Buy rating and a $777 price target writes that Apple “surprised us on the upside,” and “we believe this will prove to be a major upgrade cycle.”

Mobile chip pressure

Shares of Broadcom (BRCM) are down $1.78, over 6%, at $25.36, after the company last night reportedQ3 revenue of $2.15 billion and EPS of 76 cents, beating the consensus $2.13 billion and 69 cents, but forecast revenue this quarter at $1.92 billion to $2 billion, below tech consensus for $2.13 billion.

On a conference call following the report, CEO Scott McGregor told analysts the company sees “some near-term headwinds due to sequential growth, including softness in wireless connectivity, intense competition for low-end 3G platforms without our 4G LTE revenue until 2014, softness in broadband access, and roughly seasonal declines in our infrastructure business.”

There are numerous cuts in price targets on the shares this morning, and one downgrade, that I can see, from Wedbush's Betsy Van Hees, who cut her rating to Neutral from Buy, with a $27 price target, writing that although she was expecting the weak outlook, it was “worse than we expected primarily due to an even choppier mobile market from intense competition in 3G, inventory corrections, and connectivity share loss.”

“We expect challenges in the mobile business to persist into the 1H and despite our high expectations for LTE share gains.”

Goldman Sachs's James Schneider this morning writes that downside is limited, based on his sum of the parts valuation, but that “Broadcom will need to diversify its customer base significantly and show clear design win momentum in LTE, which we do not anticipate before 2H14.”

Social disruption

CNBC's Julia Boorstin this morning reported that social networking site LinkedIn (LNKD) is experiencing technical difficulties preventing the service from being reached on both the Web and on its mobile applications.

Boorstin reported this is happening as the company is hosting a mobile development conference to discuss its progress in mobile applications. The stock is down $7.54, or 3%, at $237.41.

This is the second major social networking outage this week, following one at Facebook (FB) on Monday that lasted several hours of the morning.

Dimmer view for LED

Shares of LED lighting specialists Cree (CREE) are down $13.18, or almost 18%, at $61.13, after the company yesterday afternoon missed analysts' fiscal Q2 revenue expectations and forecast this quarter below consensus.

The stock has gotten two downgrades this morning, so far, from Stephens & Co.'s Harsh Kumar, cutting to Underweight from Hold, and from Needham & Co.'s Edwin Mok, who cut his rating to Hold from Buy, writing that “While Cree seems to be executing its grand vision in LED lighting, we now believe gross margins will not see much upside from current levels, and we are discouraged by the limited topline growth of LED components despite a more stable pricing environment.”

“Cree looks well positioned to leverage LED lighting adoption, but with less earnings growth in our model, we find it hard to justify the high valuation.”

Enthusiasm curbed

Shares of Netflix (NFLX) are up $6.73, or 2%, at $329.25, bouncing back from yesterday's 9% sell-off, which came before Carl Icahnannounced in the evening he had trimmed his position in the stock after tremendous gains, but still believes shares are cheap. That disclosure pushed shares down further in the after-market.

MKM Partners's Rob Sanderson, reiterating a Buy rating this morning, and a $370 price target, raises his estimates following the company's better-than-expected Q3 report on Monday, and writes that he was not surprised by the pullback yesterday and investors shouldn't be concerned, as “We regard the reversal in the stock yesterday as healthy.”

Network difficulties

Shares of Juniper Networks (JNPR) are down $1.04, or 5%, at $19.32, after the company this morning reportedQ3 revenue and earnings per share that topped consensus, at $1.19 billion and 33 cents versus consensus of $1.17 billion and 31 cents, but forecast this quarter below expectations, at $1.2 billion to $1.23 billion, and 35 cents to 37 cents per share, versus consensus of $1.23 billion and 36 cents.

Michael Genovese with MKM defends the shares this morning, reiterating a Buy rating and a $26 price target,a writing that “The overall 3Q13 numbers were upbeat and clean even though U.S. Enterprise and Federal sales came in weaker than expected against tough 2Q13 comps.”"Management's 4Q13 revenue guidance is 1% below consensus at the mid-point, but is explicitly tempered by the Federal shutdown.”

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